Apple unfazed by sales dip ahead of next iPhone

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Apple unfazed by sales dip ahead of next iPhone

As iPhone fans await the release of a new model, they are delaying purchases and may cause Apple, the world’s largest company by market value, to post its slowest sales and profit growth in more than two years.

With a redesigned model probably arriving by October, analysts estimate that sales of iPhones - Apple’s biggest source of revenue - slid in the fiscal third quarter. While analysts predict that the next iPhone will be the best-selling smartphone yet from Apple, the purchasing delays will probably weigh down results until the device hits stores.

“People are waiting,” said Andy Hargreaves, an analyst at Pacific Crest Securities in Portland, Oregon. Apple will sell about 25.4 million iPhones, he estimates, compared with 35.1 million in the previous quarter. “It’s going to be bad now, but great later,” he said.

A similar slowdown occurred ahead of last year’s iPhone 4S release in October, causing Apple’s shares to slide when the company reported profit that fell short of analysts’ estimates for the first time since 2003.

Apple hasn’t said when it will unveil a new iPhone, and has given no details about plans for the product. Yet the dip in unit sales underscores how speculation about Apple’s plans, including a slew of Web sites dedicated to publishing rumors about new devices, can lead potential buyers to sit on their wallets while waiting for a new product.

“Customers are increasingly tech-savvy and they want to have the latest and greatest,” said Anthony Scarsella, the chief gadget officer at Gazelle.com, a Web site that buys and sells used iPhones and other consumer electronics. He said people wind down trading in their iPhones about four to six months ahead of a new iPhone release. “It’s something we definitely see year after year.”

Tomorrow, Apple will probably report that its profit grew 35 percent to $9.86 billion, according to the average of analysts’ estimates compiled by Bloomberg. Sales are projected to rise 31 percent to $37.3 billion. While that kind of growth would outpace gains by most of Apple’s technology peers, it would be the company’s slowest since 2009.

Apple is preparing to overhaul the look of the iPhone and has placed orders with suppliers for screens that are bigger than the phone’s current 3.5-inch screen, people with knowledge of the matter said in May.

Jim Ferrer, a commercial insurance broker in San Francisco, is among those waiting for the next iPhone. He bought the first model, known just as the iPhone, when it was released in 2007 and has held on to it ever since.

Ferrer considered getting the iPhone 4S, and then decided to delay the purchase when he saw that the newest model may be lighter and have a stronger processor that will make applications run faster.

“There are so many changes that keep coming out that I want to make sure I get the right one,” he said. “Then I’ll stick with it.”

Bloomberg

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